Cryptocurrencies are hot right now. Many people have heard of Bitcoin and the promise it makes for a more open and decentralized financial system. But there are thousands of cryptocurrencies, and many of them aren’t even being used as money.
What’s the point of all these cryptocurrencies? Why are they worth anything? Why do they exist? What’s going to happen to them?
To help you understand the value and purpose of these cryptocurrencies, we put together this handy guide. It’s like having your own cryptocurrency expert on the other side of the screen, but without the weird accent.
Why do cryptocurrencies exist and how can they change the global economy?
Cryptocurrencies are digital currencies that are not issued or controlled by any government or central bank. They can be used for payments, store of value, or a store of value. They are used as an alternative to fiat currencies and are used for international payments, as a store of value, or for speculative trading. From what we see right now, they can not only change the global economy, but they have a tremendous impact on almost every aspect of society.
What is a cryptocurrency?
In short, a cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography. They are stored on the blockchain technology which means that every transaction that’s been made is visible to all the lock chain participants and the system is self-regulated this is a great thing because it prevents safety incidents and gives huge amount of freedom to crypto holders as a contrast to traditional banking governmental institutions and organisation as third parties that control everything
These assets have proven to be a fantastic investment opportunity, whether you’re just getting started or you have a diverse portfolio, full of different types of assets.
Why? The answer is simple. Although this market is extremely volatile and has ups and downs on a daily basis, it also gives amazing returns. In reality, this means that being ready to either make a strategy on how to invest in the long term; or to be an expert in day trading and take the best out of it, means making profits from crypto.
With millenials and Gen Z billionaires and millionaires, it’s somewhat difficult to find your place under the Sun and not feel discouraged. Still, it’s possible. Firstly you need knowledge about Blockchain technology in general, how it works, what it means and what it is made of. Then you need to understand what are the top 10 cryptocurrencies of the moment (and be ready to embrace the new ones). Finally, it’s always a good idea to become a member of the crypto community and exchange ideas, tips and tricks about digital money in general.
But when it comes to investing in crypto, there are several strategies you can use. However, the most popular ones are called paper hands and diamond hands. What are they, and which one is better?
Just like the name says, it’s been said that someone has paper hands if he sells his crypto assets as soon as he sees a minor change on the market, especially when it comes to bad changes: cryptocurrency drops in value or a global event occurs (which directly impacts the value of crypto). Although this might work for some, especially people who are willing to make that effort and constantly monitor both local and global markets, changes and economy; research shows that it’s better to make long-term predictions and wait for your assets to grow in value, having a bigger return of investment in the end.
Still, does that mean that having paper hands and doing day trading with cryptocurrencies is a bad option? If you’re an investor who wants to make big profit fast and you’re able to be so dedicated and to track changes constantly, short-term crypto trading is a fantastic solution because it can give you unparalleled money Returns which is something day traders usually look for.
Nonetheless, the higher the chances to make profits by investing in cryptocurrencies, the higher the chances you will lose your money as well, because of the market’s high volatility. One tweet can change everything. For example, Bitcoin value fluctuates up and down and was significantly impacted by Elon Musk’s tweets. This means that a short-term trader needs to be updated about everything that happens in the world, including the pandemic, what celebrities are talking about digital currencies, what trends are popular etc.
On the other hand, long-term investing in cryptocurrencies such as Bitcoin, Ethereum, Solana or any of the other 2,000 cryptocurrencies that are available on the market – looks more like traditional investing in stocks for example. Here, the main goal is to make good predictions and wait for your money to grow in value.
What does that mean? It means that you can wait for a year or even more years, which is exactly what happened to people who accidentally bought a certain amount of Bitcoin 10 years ago only to find out that there are millionaires today. When bitcoin was first invented, it was only worth a couple of dollars. Today, 1 bitcoin is worth around $40k! It went through rises and falls, and lost value along the way several times but as a result: people who spent a certain amount of money in these crypto assets a long time ago are now rich in digital currencies.
According to https://ethereumcode.app/, having diamond hands means not selling your cryptocurrency fast especially when a problem appears in the market. This is also popularly called HODLING as an abbreviation for Holding to Your Dear Life.
Since your goal should be to make the biggest returns possible, it might be a better idea to opt for long-term investing, because it allows you to accumulate your wealth over time, rather than taking risks that are too high and are not worth it.
Still, if you want to invest in cryptocurrencies in the long-term, this means that you have to know a lot about them. When you’re day trading bitcoin for example, you can use tips and inside the crypto exchange, such as market analytics provided by the trading platform you are using. But these analytics are pretty time-limited so it’s better to create your own strategies and make accurate predictions for the future, rather than rushing into things.